New Product Development

A recent study by my old friend James MacFarlane of Evolved Thinking looks at innovation and new product development in the finance sector. Generally compares unfavourably with best practice in manufacturing industry. Here are some of his findings.

Typical Finance Company	Typical Manufacturing Company
Little accountability for the success of new products. No established criteria to measure success and failure of product launches, and no key performance indicators (KPIs) for individuals in the businesses of product development.	Direct accountability for success and failure. Key performance indicators (KPIs) for product development staff play a significant role in determining bonuses and pay awards for their staff.
No industry benchmark for internal product development processes in the industry.	Benchmarking is a crucial activity to improve process performance.
Little post-launch evaluation of commercial and operational performance, and no follow-up.	In most manufacturing businesses, following the performance of a product in the market is an integral part of TQM (Total Quality Management) process or Six Sigma programmes. It provides the product development groups with valuable lessons and improvements, which can be made to the launching process for future products.
Incentives and rewards for innovation are merely a token "thank-you" for commitment to the business, and are not linked to the outcome of the innovation.	Employee awards for innovation may involve a significant payout on success.
Little idea as to the net contribution new products provide to the overall business. Time spent by individuals working on the launch of new products not recorded. Therefore little capability to calculate the value of product development.	Established cost-accounting practices.
Minimal investment to support new product development. Market research often considered unnecessary, especially when copying competitors or complying with regulations. Unsophisticated use of technology to support product development.	Thorough market research. Good knowledge management. Sophisticated requirements planning and project planning tools, as appropriate.

"The best manufacturing businesses launch new products with an average probability of commercial success of 85%. Our Survey found that with a few exceptions businesses didn’t even keep a record to measure the commercial success or failure of a new product. It is our belief, that the level of commercial success in Financial Services for launching new products is less than 25%."

Full copy of the report available from Evolved Thinking at £95 UK pounds.

For advice on innovation and new product development, please contact us.